Sega, the once powerful gaming giant, is set to downsize to downsize its US and European presence. Parent company Sega Sammy Holdings had announced this week that Sega is expected to make a loss of 7.1 billion yen – a staggering £54 million.

Sega set to downsizeIn order to facilitate a ‘structural reform’ of Sega’s business profile, it will be looking to downsize its operations in both Europe and the States. Unfortunately, this will include the cancellation of a number of titles in various stages of development.

Although Sega and its parent company have yet to confirm which studios and games are to be affected, it looks like anything other than established IPs with strong presences will survive the cull.

“We conducted detailed reviews of earnings projections for titles targeted toward the U.S. and  European markets” says Sega in a recent press release. “And decided to narrow down sales titles from the following period and after to strong IPs, such as ‘Sonic the Hedgehog,’ ‘Football Manager’, ‘Total War’ and ‘Aliens’, which  are expected to continue posting solid earnings”.

This downsize of Sega’s European and American portfolios will be a significant blow to its impact on the Western market as it looks to reduce those titles geared towards Western gamers.

Despite this, Sega is still expected to post annual profits for the year ending March 2012. The expected “extraordinary loss” is said to be a ‘one-off’ but seems significant enough to force Sega to greenlight the closures.  Sega have also confirmed that this restructuring will include “strengthening development in the field of digital content” such as titles released via XBLA and PSN.

AtomicKarma will bring you latest developments on this story as they happen.